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The hot topic during the 2018 Maryland legislative session was how Maryland will adapt to recent changes in federal income tax and health insurance laws.

Beyond the headlines, the Maryland General Assembly considered many bills which directly affect Maryland condominiums, homeowner associations, and housing cooperatives. Several new laws which help condos and HOAs were enacted.Continue reading →

The Maryland legislature has passed legislation which affects the management and operation of condominiums and homeowner associations. New laws which take effect October 1, 2016 include:

Resale Disclosures. Homeowner associations will be required for the first time to provide resale disclosure information to an owner selling a home in an HOA. For condos which have long been required to provide resale disclosures, the disclosure requirements have been clarified or changed on matters such as assessments, replacement reserves, pending litigation, unit alterations, and violations of health or building codes. And, the amount which condos, HOAs and management companies may charge for providing resale disclosure information is capped by the new law.

Tax Sale Procedure. The purchaser of property at a tax sale will be required to notify condos and HOAs when a court suit is filed to prevent owners of property in those communities from keeping ownership of property. The new law also provides that when a tax sale is approved by the court, the tax sale purchaser is responsible for payment of condominium and homeowner association assessments from the date of the court judgment, whether or not a tax sale deed to the property is recorded in the land records.

Assessment Collection. A court suit will not be permitted for any unpaid assessments where the time for filing suit has expired. Any subsequent payment on the debt, or written or oral affirmation of the debt will not revive or extend the statute of limitations. This applies to all suits involving consumer debt, not just association assessments.

Home Gambling. Card games and mah jong games hosted in a residence not more than once a week will now be allowed where the total gambling bets for all players is no more than $1,000 in a 24-hour period. In senior communities with age 55 restrictions, these games will also be allowed in the common areas.

Legislation considered but not enacted would have required state registration of all condos, co-ops and HOAs, and would have made it easier to amend association governing documents by allowing an owner’s failure to vote on a proposed amendment to be counted as that owner’s approval of the proposed amendment.

Also rejected was a bill to prohibit provisions in condominium sales contracts and bylaws which limit the ability of condo associations to file suit to enforce construction warranties on the common elements.

As the Maryland General Assembly heads to the end of the 2016 session on April 11, some bills regarding community association governance are still under consideration. Others have been killed in committee. To become law, a bill must be passed by the Maryland House and Senate and signed by the Governor.

Here’s What’s HOT!

Resale Disclosures. A bill to cap the amount which an association or management company can charge for providing resale disclosure information has passed the House and is headed to the Senate. If enacted, it would also create a new obligation for homeowners associations to provide resale disclosure information to an owner selling a home in an HOA.

Annual State Registration. Legislation to require each condo, co-op and HOA to register with the state was passed by the House after it was scaled back to limit the information required.

Foreclosure and Tax Sale Notices. Where condos and HOAs have recorded assessment liens, a bill passed by the House would require lenders to notify the association of any proposed, postponed or canceled foreclosure sale. Another bill passed by the House and Senate would require tax sale purchasers to notify condos and HOAs when a court suit is filed to prevent owners of property in those communities from retaining ownership of property purchased at a tax sale.

….and Here’s What’s NOT!

Condo Construction Warranty. House and Senate committees rejected proposed changes in the Maryland Condominium Act to prohibit provisions in condo sales contracts and bylaws which limit the ability of condo associations to file suit to enforce construction warranties.

Amendment of Governing Documents. A House committee also killed legislation to make it easier to amend the governing documents of condos and HOAs by allowing an owner’s failure to vote on a proposed amendment to be counted as that owner’s approval of the proposed amendment.

With the Maryland legislature in the midst of its 2016 session which runs to mid-April, several bills which would affect condomium and homeowner association operations are now being considered by House and Senate legislative committees of the Maryland General Assembly.

Resale Disclosures

Legislation concerning resale disclosures would cap the amount which an association or it management company could charge an owner for providing the governing documents and other information in connection the sale of the owner’s home. As introduced, the bill would limit the basic charge to $250 and allow additional charges of $100 to inspect the property for covenant violations and up to $100 for providing an expedited response to a request for resale disclosures.

Condo associations have long been required to provide resale disclosure information. If enacted, the bill would create a new obligation for a homeowners association to provide resale disclosure information to an owner who is selling a home in an HOA.

Condominium Construction Warranty

Also under review is legislation to amend the Maryland Condominium Act to prevent developers of residential condominiums from including provisions in sales contracts and condo governing documents which limit the ability of condominium associations to file suit to enforce construction warranties for the condominium common elements.

Among the provisions which the warranty bill would prohibit are those which purport to shorten the statute of limitations applicable to any legal claims; waive the “discovery rule” or other accrual date applicable to claims; and prevent a condo association from bringing claims on behalf of two or more unit owners. It would also disallow developer-imposed requirements that as condo association obtain the approval of unit owners, the developer or others as a condition to commencing mediation, arbitration or litigation on behalf of the condo association.

Annual State Registration

Legislation has also been introduced which would require annual state registration of all condos, HOAs and coops and require associations to provide contact information for the association board members and any management company and attorney.employed by the association. It would also require information regarding the number and type of residential units, fidelity insurance, replacement reserves, grievance procedures and any other information required by the Maryland Department of Assessments and Taxation.

Amendment of Governing Documents

A bill to make it easier to amend the declaration, bylaws and other governing documents of condos and HOAs has also been introduced. It would allow an amendment by a vote of owners in “good standing” which includes only owners who are not more than 3 months in arrears in payment of association assessments and have satisfied other requirements of the bylaws. An amendment could be passed by two-thirds of the total votes of owners in good standing, or by a lower percentage if required in the governing document. The legislation would also allow an owner’s failure to vote to be counted as that owner’s approval of the proposed amendment.

As of mid-February 2016, these bills are under review by House and Senate legislative committees and have not been enacted..

The 2015 legislative session of the Maryland General Assembly ended April 13 after lots of talk but not much action on bills concerning condos, coops and homeowner associations.

Legislation to extend resale disclosure requirements to homeowner associations and cap the fees which may be charged by condos and HOAs died in the final hours of the legislative session. As passed by the House of Delegates, the bill would also have limited the liability of a condo or HOA for issuing an incorrect resale disclosure statement. The Senate approved the fee cap but did not agree to the liability limits. Therefore, the legislation was not enacted.

A bill to prevent developers from limiting condominium statutory warranty rights was withdrawn; and a bill to require access to common areas for political candidates was rejected on initial review by a House legislative committee.

A proposal to eliminate a 3-month waiting period before a housing coop can initiate legal action to evict a coop member for not paying assessments was referred for further study. Legislation to regulate community association managers was not considered this year for the first time in several years

Although not limited to community associations, several other bills would have made it more difficult to collect assessments from delinquent owners. One bill would have restricted the ability to collect court judgments by increasing the amount exempt from garnishment. Several other bills proposed to delay residential foreclosures. These bills were not enacted.

These topics may get another look next year. For 2015, the General Assembly session had lots of talk—but no new laws regarding governance of condos, coops and HOAs.

Despite the recent arctic air sweeping through Maryland, the 2015 Maryland legislative session is heating up.

After a slow start in January with many new legislators and a new Governor taking office, a rush of bills were introduced in February. Among the bills concerning governance of Maryland condos, coops and HOAs are proposals to (1) prevent developers from limiting condominium statutory warranty rights; (2) require access to common areas for political candidates; and (3) require homeowner associations to provide resale disclosure information and cap the fee charged by condos and HOAs for providing resale disclosure information.

A proposal to change the housing cooperative law adopted in 2014 would eliminate a 3-month waiting period before a housing coop could initiate legal action to evict a coop member for not paying assessments.

Other legislation under review would restrict the ability to collect court judgments for delinquent assessments. Although not limited to condos, coops and HOAs, the bill would make it more difficult to obtain money in bank accounts and sell property to pay a person’s debts.

Legislation regarding licensing of community association managers (which had been considered the past several years) has not been introduced in 2015.

The 90-day legislative session of the Maryland General Assembly runs until April 13, 2015.

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The Thomas Schild Law Group provides legal services to community associations – condominiums, homeowners associations, and cooperatives – in Maryland and the District of Columbia. We also represent property owners regarding contract review, business disputes, and debt collection.

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